Urgent: Connecticut Tax Bill Surges to $127M Amid Hospital Crisis

UPDATE: Connecticut’s unpaid hospital provider tax bill has skyrocketed to over $127 million, as negotiations continue on how much the state might forgive to facilitate a crucial hospital acquisition. This alarming figure, which dates back to 2022, highlights the financial struggles of Prospect Medical Holdings, a California-based hospital operator that filed for bankruptcy in January.

Documents obtained by The Connecticut Mirror confirm that Prospect Medical Holdings owes the state for multiple facilities, including $64.4 million for Waterbury Hospital, $47.2 million for Manchester Hospital, and $16.2 million for Rockville General Hospital. This situation is developing rapidly, as state officials explore options to ease the burden as part of a deal for UConn Health to acquire Waterbury Hospital.

State Comptroller Sean Scanlon revealed that discussions are underway regarding a tax settlement with Prospect Medical Holdings and its landlord, Medical Properties Trust. The urgency of these negotiations comes as the state aims to stabilize its healthcare system amid mounting financial challenges.

“We want to keep these hospitals going. I know how important they are to the community,” said Gov. Ned Lamont as he reflected on the evolving situation.

As the tax burden accumulates, the state is expected to consider significant tax forgiveness to ensure the acquisition proceeds smoothly. This comes after the governor previously rejected a plea for $80 million in state funding from Yale to assist with a failed acquisition attempt. Yale ultimately paid $45 million to conclude litigation over the deal.

The Connecticut Hospital Association has yet to comment on the situation, but the tax forgiveness is critical, as the hospital provider tax is essential for financing the state’s Medicaid program. If hospitals fail to meet their tax obligations, the state’s federal matching funds are jeopardized.

Meanwhile, a subsidiary of Hartford HealthCare has successfully bid $86.1 million in bankruptcy court for Manchester Memorial and Rockville General Hospitals, further complicating the landscape for Prospect Medical Holdings. Notably, Prospect originally purchased these facilities for $105 million in 2016.

The state plans to borrow $390 million to fund capital improvement projects at all three hospitals involved in the negotiations, including Waterbury, Bristol Hospital, and Day Kimball Hospital in Putnam. Speaker of the House Matt Ritter highlighted the necessity of addressing the tax debt separately from the hospital bonding deal to ensure the acquisition aligns with community needs.

As this situation continues to unfold, officials stress the importance of maintaining hospital services in Connecticut. Watch for forthcoming updates on the negotiations and how they may impact healthcare access across the state.